This weekend, Buenos Aires hosted the annual summit of the group of 20. Marked by the media influence of trade negotiations and discussions on climate, this edition 2018 also focused on the difficulties of the South American continent and its currencies. By Sebastien Oum, Ceo Yseulis
Thirteenth meeting in the Argentinian
For this thirteenth meeting, the Argentinian capital wanted to highlight the evolution of work in the digital age, private investment to support development infrastructure, and sustainable agricultural production. Unfortunately for the host country, the world geopolitical and economic news has been invited to the program of this meeting to the point of capturing most of the media coverage of the event. Behind the scenes, the Argentine peso, the Brazilian real, and the Venezuelan bolívar were indeed present in the heart of the negotiations.
Record inflation in Venezuela, a stall of the Argentine peso and election of a far-right president in Brazil, we must recognize that sources of instability are not lacking in South America. In October, Venezuelan bolívar inflation exceeded the astronomical threshold of 800,000%. On the side of the Argentine peso, the volatility has certainly fallen in recent days, but the currency remains under pressure at around 40 pesos for 1 euro (against 22 on 1 January). In Brazil, the liberal program of President-elect Jair Bolsonaro currently allows the real to cost 4.30 reais for 1 euro (against a high of 4.91 in mid-September). In this turbulent context, in order to stabilize their economies, Latin American countries must first and foremost stabilize their currencies.
To do this, in the wake of the G-20 negotiations, Chinese President Xi Jinping and Argentine President Mauricio Macri signed this Sunday a swap (swap) worth $ 9 billion. By sealing this agreement to exchange with China this sum of money in the future at an exchange rate and at a given date, the Argentine Central
Bank signs a nice transaction and strengthens the stability of its currency
Supported by the International Monetary Fund, South America’s third-largest economy had received $ 50 billion in June 2018 before it was $ 57.1 billion in September and advanced to deal with the urgency of the situation. The signing of this agreement with Beijing allows Buenos Aires to strengthen its foreign exchange reserves while strengthening its economic cooperation with the Asian giant.
Beijing will buy American
Donald Trump waives the imposition of exorbitant customs duties against China in exchange for more purchases of US products.
Beijing has therefore committed to buying a “not yet defined, but very substantial” amount of US products, to reduce the colossal trade imbalance between the two countries. Moreover, China will start this Monday to buy more American agricultural products.
Washington waives to carry as expected from 10% to 25% tariff on 200 billion dollars of Chinese imports – half of the total – from 1 January 2019 – A truce in this Sino-US conflict. This decision is only suspended for a period of 90 days pending a new agreement on “structural changes” in their commercial relations.
Wang Yi told him about a “win-win” outcome of this meeting, at the end of a high-voltage G20 summit in Argentina. Trump after bending Mexico, Canada, the US did it bend China? Case to follow.